Small business loans give you the funds you need to help with the expenses needed to run your company. The most popular 7(a) loan can help you start a business, acquire a new one or grow your current company. There are also loans to cover equipment and real estate, along with microloans when you need $50,000 or less. The eligibility requirements vary per lender; however, it is up to you to prove you’re worth the risk to receive the loan. Here are six tips to help you succeed at securing a small business loan.
1. Complete All of the Application
Incomplete applications will result in a denial or a delay. Therefore, make sure you provide all requested information and supporting documentation.
2. Include a Detailed Business Plan
A detailed business plan shows your vision for your company and the steps you will take to make it a success. Lenders put a lot of weight on this document, so take the time to make sure you have a solid and persuasive plan that is grammatically correct.
3. Shop Multiple Lenders
Applying with more than one lender increases your chances of securing at least one offer. Plus, it allows you to shop for the best loan terms and interest rates.
4. Invest Your Money
Putting up some of your own money as collateral shows lenders you are committed to your company’s future success and serious about your business. Make sure to use any extra cash you have on hand instead of raiding your retirement savings accounts.
5. Show Your Company’s Stability
If you have been in business for several years, show that you are creditworthy by sharing your company’s bank statements, tax returns, balance sheet, cash flow statements and list of accounts. Be as detailed as possible to show your company is financially strong.
6. Apply With Local Banks and Credit Unions
Small banks and credit unions in your city are often more friendly to small businesses. Do a bit of research to see if you know anyone who works in one of your local financial institutions. If so, reach out to them first, and share your plan to apply for a small business loan. Allowing them to introduce you to the loan officer ups your chances of getting approved for the loan.
Following these tips helps you succeed at securing a small business loan for your company. In addition, the extra effort put into your application leaves a favorable impression on the lender.